Types of Seed Funding for startups in detail
We have discussed seed funding in our earlier blogs. Now it’s time to understand the types of seed funding that are as important as seed funding itself. It will help you understand the different sources available to raise funds for your startups.
So, let’s dive deep into it
Crowdfunding has become one of the most sought platforms for raising funds in contemporary times. Through these platforms, anyone from anywhere can invest in startups. Crowdfunding operates through platforms or social media sites that connect entrepreneurs with potential investors.
Investors include a large pool of people, each investing a small amount of money as per their capacity in the business listed on the platform. A crowdfunding website generates revenue by the amount of money raised.
2. Angel Investors
Angel investors work as an angel to startups. They bring capital into the business with their year-long experience in the industry. These investors act as mentors apart from investors. They are wealthy individuals who invest in business at the highest risk. They invest money in return for equity in the company.
3. VC funding
Venture capitalists are individuals and organizations who invest in startups for equity in the firm. VC invests the funds of the third party and hence evaluates your business more closely than angel investors. They want less risk and will only invest in your business when they find it profitable and less risky
These investors not only offer you the funds but also act as a trainer and office space provides for you. These investors do not ask for equity and will do small seed funding. Many institutes like IIMs and IITs also work as incubators.
People who focus on the growth and scaling-up of the business are called an accelerator. They provide small seed funds along with other services like mentoring, office space, etc. Unlike incubators, they ask for equity in return for their investment and services. Y Combinator and Techstars are among the popular accelerators.
6. Corporate seed funding
These investors include big companies like Google, Apple, and Intel. They invest in startups for various reasons, among which a high future profit source and IT services can be the one. These investors can be very useful to the new companies.